[aldo90731]

This article appeared on Auto News yesterday and had been posted inside another thread. I want to post it on its own because this is an important topic that goes well beyond the discussion of production allocation: Starved of product, Fiat brand is at a crossroads

The article quotes critical stats on Fiat brand’s condition: market share in EU and EFTA is half of VW’s, and even below that of luxury German automakers. Conditions in Brazil, Fiat’s other key market, look even worse, with a loss of market share from 22% in 2013 down to 9.2% this time last year, and to 8% this year. Things in Italy, its home market, don’t look much better, where sales have fallen 15% year-over-year.

The article cites lack of SUVs as the core issue. IMO lack of product is only half of the story.

I admit not being an expert on the EU market. Nevertheless, these figures confirm what I have been seeing in Latin America, and I have long diagnosed to be Fiat’s underlying weakness in that growth market.

Unlike JATO, who is a product specialist, my assessment comes from the consumers’ perspective. As I have indicated numerous times, Fiat’s weakness in Latin America is anchored on underlying negative brand perceptions, which result from poor quality. These consumer perceptions have been established over many years, and are unlikely to be overturned by simply launching new products.

Although North America is far from being representative to Fiat, I expressed on Allpar my surprise that adding 500X didn’t stop Fiat’s downward sales spiral in this market. In my opinion, 500X is the “canary in the coal mine” that reveals that Fiat’s woes are not just lack of product, but go deeper than that.

Fiat finds itself in a precarious spot: a market space defined by low price AND low volume. Given current trends, getting out of that hole is going to take much more than adding new products: it is going to require a shift in product quality and, more importantly, a shift in consumers’ perceptions.

Such a shift would normally take 10+ years. However, if JL’s ongoing issues and FCA’s recent 5-million recall are any indication, that journey has not even started. So I wouldn’t expect to hear about it on the upcoming June meeting.

I realize this may read like an affront to Fiat fans on here. I am simply trying to provide an objective, fact-based assessment that is fair and balanced. This is an important topic, so please let’s keep the discussion civil and refrain from resorting to personal attacks.

 

[Lampredi]

There appears to be no understanding of the concept of long term in FCA. Which is why I don't believe it will be willing to do what it takes to resurrect Fiat, or for that matter, any other brand bar Jeep and RAM (Chrysler and Dodge are especially vulnerable, but Alfa Romeo and Maserati are not off the hook, either).

 

[Muther]

The date that quality begins impacting the executives’ quarterly and annual bonuses, is the day before quality is addressed. It won’t happen a minute prior to that that.

 

[T_690]

IHS Market refrained from comment?

That says a lot.

We will be smarter in 5 days.

 

[aldo90731]

There’s no guarantees of that.

 

[T_690]

Oh... I think we will know a lot of things in a 5 days time. Including future powertrain strategy.

It's extremely important for EU because of incoming more stringent fleet CO2 targets. Which BTW will be harder to achieve because of switch from NEDC to WLTP test procedure and because of switch from diesel to gasoline engines by a lot of buyers.

In EU fleet CO2 target for 2021 should be 95 g/km. Maserati is not counted with other FCA brands.
It's connected to car weight. And due to a lot of light weight Fiat models FCA could have a very hard to achieve 92 g/km target.
But if we look at a single brands than I believe that both Alfa and Jeep brands will achieve their targets. First of all Jeep has a lot of heavy weight vehicles. Both Alfa and Jeep will rely heavily on diesel engines. Due to higher price point they can offer some form of electrification.

Actually I think that future standards are playing against small car and low cost brands in Europe. For me it's very clear why is Sergio pushing a 500 family of Fiat and why will future 500e be so important for a whole FCA in EU.


I can not comment LATAM except that FCA interest there is a Mercosur and that plan is including both Jeep and what we call a Fiat Professional in Europe. AFAIK Fiat Toro is a big success in Brasil.

 

[ECT72]

Fiat taking a Skoda or Dacia like path forward in Europe makes sense. If they want to stay in the US, which I think is worthwhile, they will have to address the 1000 lbs gorilla in the room and offer a Hyundai like warranty or better- 7 year 80k miles or better.

 

[Lampredi]

Fiat taking a Skoda or Dacia like path forward in Europe makes sense.

Skoda and Dacia are brands that receive hand-me-down old technology from their parent brands VW and Renault, respectively. If Fiat were to choose a similar path, there would be no European mainstream brand within FCA from which to inherit old engines and architectures. But the Fiat brand IMO shouldn't go down that path, it should be competing with VW and Renault directly.

 

[JavelinAMX]

.

What is it? Nine years to prepare for this day? Approximately so.
{ Speaking of the time we've seen what has come to be known as FCA in operation }

If you're choosing to do One thing, by nature you're choosing not to do another range of things which might've been among your options ( and, true enough, at times you have to choose to do but one thing or pass altogether ).

Obviously, then, we're seeing the Sum of a series of choices.

We're Here now. No disputing. This HAS to be the chosen destination, by default.

This just doesn't feel as though any of us would want to be reveling in it.

.

 

[aldo90731]

.

What is it? Nine years to prepare for this day? Approximately so.
{ Speaking of the time we've seen what has come to be known as FCA in operation }

If you're choosing to do One thing, by nature you're choosing not to do another range of things which might've been among your options ( and, true enough, at times you have to choose to do but one thing or pass altogether ).

Obviously, then, we're seeing the Sum of a series of choices.

We're Here now. No disputing. This HAS to be the chosen destination, by default.

This just doesn't feel as though any of us would want to be reveling in it.

.

Indeed. I doubt anyone thought we would still be having this conversation at this stage.

 

[KrisW]

Fiat taking a Skoda or Dacia like path forward in Europe makes sense.

First, Skoda and Dacia are two very different brands. Skoda is not a bare-bones car brand - it's squarely in the European mainstream. Its role in the European market is closer to Toyota's in the US: reliable, if unexciting, cars. You can get pretty luxurious Skoda models if you want to, but most buyers stick to the entry trims which have the best resale value. Dacia, on the other hand, is bare-bones product, similar to cars of about 15-20 years ago in terms of creature comforts.

Second, Most of FIAT's profit in Europe is from the 500 sub-brand, which is a collection of premium products (500 especially), so neither of those brands fit.

There was talk of FCA reviving one of its defunct brands, Innocenti, to offer a Dacia-like product in Southern Europe, but I tend to agree with @T_690 that upcoming safety and emissions laws will make it very hard for Dacia in future, and also, despite the initial press coverage, Dacia has not been a roaring success for Renault: its price point is good, but the competition at that price-point isn't other new cars, but rather second-hand cars from more luxurious brands.

If they want to stay in the US, which I think is worthwhile, they will have to address the 1000 lbs gorilla in the room and offer a Hyundai like warranty or better- 7 year 80k miles or better.

I agree with this. FIAT brand has offered 5-year 100,000km warranties in the past in markets where customers perceive its cars to be unreliable. The warranty costs would be pretty small on these car

However, that won't fix the low "Initial Quality" scores, which are as much to do with the cars being different than any actual quality defects.

 

[valiant67]

However, that won't fix the low "Initial Quality" scores, which are as much to do with the cars being different than any actual quality defects.

While that is one of the more creative excuses for low quality scores, it still remains an excuse. Perhaps they need to hire some usability experts if they really believe this is the case.

 

[AmbassadorSST]

There appears to be no understanding of the concept of long term in FCA. Which is why I don't believe it will be willing to do what it takes to resurrect Fiat, or for that matter, any other brand bar Jeep and RAM (Chrysler and Dodge are especially vulnerable, but Alfa Romeo and Maserati are not off the hook, either).

They understand the long term concept of Jeep and RAM...hence why they are pushing both globally.
Dodge will be okay, cause we know what Dodge is...after the Journey and Caravan move over to the Chrysler brand or get axed all together...Dodge will be a higher margin performance brand.
Alfa is just getting started on it's renaissance, and Maserati has never been beloved like the other marque luxury brands.

Chrysler is still lost in the woods and Fiat is drowning in the swamp...I do find it funny that the 2 mainstream brands that have no clear direction are the name holders of the company: Fiat-Chrysler Automobiles.

 

[Bob Lincoln]

And for that reason, probably, I don't know a single person who even thinks of or considers a Fiat or Chrysler brand product. Dodge is mostly scorned here, and only RAM gets attention. Jeep is thought of as an unreliable rustbucket by most people I know.

 

[valiant67]

And for that reason, probably, I don't know a single person who even thinks of or considers a Fiat or Chrysler brand product. Dodge is mostly scorned here, and only RAM gets attention. Jeep is thought of as an unreliable rustbucket by most people I know.

That last sentence is the scary one, and it’s what more people than we want to imagine think of Jeep - and why Subaru does so well in the northeast. It’s a strong perception to overcome.

 

[KrisW]

Topic is the "Fiat Brand in Europe". Dodge vs Jeep vs RAM elsewhere, please?

 

[Adventurer55]

I believe one of the reasons for no long term planning is square on his shoulders. That is/was his obsession to merge with someone. Very hard to make long term plans when your boss doesn't want to.

 

[KrisW]

It's more a consequence of the group's priority on reducing net debt. For Alfa Romeo, we've heard of a few examples where there are products planned, but sign-off hasn't happened because the funds aren't available yet. There are rumors of FIAT products in similar circumstances - particularly the successor to Punto, and the very necessary C-SUV model.

Planning and design can and did continue: production approval was the bottleneck. I hope this will now change.

 

[Dave Z]

I still think the wrong brand died in 2001... most people still associate Chrysler with the 1970s bailout, the 2008 bankruptcy, etc. Well, that's my impression. Aldo could tell us for sure. Jeep does very well down here, maybe less rust?

 

[aldo90731]

The role of a brand is multifaceted. A brand lures in new buyers with excitement and aspiration, and retains existing owners with their trust and satisfaction. A brand defends its business from the competition, and provides assurances when conditions look bleak. A brand provides a vision into the future through its creativity and innovation.

It is by doing all of these these things that a brand generates revenue and profits this quarter, next quarter, next year and next decade.

A strong brand like Toyota strives to do all of these things —admittedly, at times better than others. And it is by playing all of these roles with a degree of competence that the markets reward a brand with solid, sustainable profits.

Therefore a brand is like an integrated system: all of the parts need to be there for it to amount to one valuable asset. Think of a spider: all eight legs attach to the torso, head and fangs to be successful and survive in the wild.

IMO, FCA does not have a well developed, fully-integrated brand that does everything a brand ought to do to survive in the wild. On one corner is Jeep, loaded with excitement and aspiration to lure in new customers and generate revenue. But Jeep’s ability to generate lasting satisfaction and trust is limited. Jeep’s traditional off-road capability is enough to satisfy a niche of owners who value its rock-crawling prowess. But for the average mall-crawling customer, that off-road prowess becomes meaningless the moment that relatively new Jeep fails to start, the electronics misbehave, or whatever it is that drives Jeeps to the bottom of the quality charts. BTW, FCA is actively trying to swap Jeep’s traditional owner base with a more gentrified one. The outcome of this remains to be seen.

Dodge is in a similar position: the brand stands for muscle and performance that serves to attract new customers, but does little to engender trust and retention, let alone defend from the competition and provide assurances in times of uncertainty. A key difference between Jeep and Dodge is that Jeep competes where the market is growing at the moment —SUVs; while Dodge’s space is primarily in cars, where the market is shrinking. And sales reflect this.

Ram’s positioning appears to overlap Jeep’s and Dodge’s: a combination of truck durability mixed with truck muscle. The key strength of Ram is that it competes in a staunchly loyal segment: full-size pickups. The key weakness of Ram is that the brand is defined by full-size pickups. We already know what happens to fullsize pickup sales when housing construction slows, fuel prices become unstable, and the economy weakens.

BTW, for all the success Jeep and Ram show in current form, they still have not been tested by an economic downturn.

Alfa Romeo appears to be an interpretation of Dodge but with a continental flair; with a similar ability to excite and attract new customers, but an ingrained inability to engender trust and retain customers, let alone to provide assurances in times of uncertainty.

Despite their past, Chrysler is still able to generate visions of comfort and prestige; Fiat of efficiency and fun to drive. But neither of them has the quality reputation to generate trust and retain owners, let alone provide assurances in bleak times. The fact that both Fiat and Chrysler are starved of products, of brand meaning and vision render them like atrophied legs the spider has to drag around wherever it goes.

When everything is said and done, FCA doesn’t have a unified brand that attaches all the legs to the rest. It seems to believe that lumping every brand into the showroom will take care of that.

Further, each of these brands’ strengths and weaknesses are a reflection of FCA itself: its advantages in leading design, creativity and efficiency are neutralized by chronically inconsistent quality and customer treatment; by a heavily concentrated portfolio designed to maximize returns today, but inadequately positioned to protect and defend from changing market and competitive conditions.

FCA looks like a spider with four strong left legs and four weak right legs. We can imagine what happens to a spider like that out in the wild.